Session 10 Selling Chain Management

1. Session 10 Selling Chain Management

2. Selling Chain Management • What is Selling Chain Management? • Selling-chain management is defined as the application of technology to the activities in the whole life cycle of an order – from inquiry to order. • Companies will move away from automating discrete tasks, such as lead management, configuration, and pricing, and move toward an integrated info-structure that view order acquisition holistically, as an end-to-end process involving every department, from marketing to logistics.

3. Selling Chain Management • Why Selling Chain Management? • Sales forces and strategies under increasing pressure. • The availability of new sales channels, increased choice available to consumers, product and production flexibility, rapid changes in organizational strategies internally and externally and the increasing demands of customers are all increasing the complexity of the selling process. • Creation of a flexible, integrated and responsive sales process is critical to the emerging E-businesses. Stream lining and accelerating the information flow from customer to production and back is a critical skill that modern businesses have to develop.

4. Benefits of Selling Chain Management Increased ease of customer trading Increased value to the customer Ease of ordering and tailoring Rising sales effectiveness and customer satisfaction Consistency across all channels Increased efficiency of Relationship management

5. Selling Chain Structures Enterprise with Multiple Sales Channels Distributor Customers OEM Reseller Sales Force Self Service Selling Chain Management • Selling Chain Management • - An integrated multi-channel order acquisition strategy, focusing on the buying process • Drivers • - Business Forces • Mass customization/personalization, Costs of presale support and order errors, Multi-channels, Product complexity, Deregulation and M&A’s • - Technology Forces • Limited SFA functionality, Limited process functionality, Limited sales effectiveness

6. Customize Inquiry/ Prospect Commit Order Order Life Cycle Core Process & Technology Order Entry Configurator Contract Pricing Sales Lead Commission ATP Proposal/Quote Product Catalog Integrated Solution Integrated Selling Chain Applications Selling Chain Management - Architecture Available-To-Promise

7. Session 11 Business Process Reengineering (BPR)

8. Business Processes • What are Business Processes? A set of activities that transform a set of inputs into a set of outputs (goods or services) for another person or process using people and tools

9. Business Process Improvement • Why? • Customer Demand and Satisfaction • Competition • Cost Reduction • Productivity improvement • Basic Steps in Process Improvement

10. Limitations of Continuous Process Improvement Model • Incremental improvement • Technology growth demands vast improvement • Internet, Open Trade, Ecommerce Tough Competition, Require Breakthrough performance • Higher rate of change – slow improvement not affordable • BPR – Approach for rapid change

11. What is BPR • "Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvement in critical, contemporary measures of performance, such as cost, quality, service and speed" • BPR promises dramatic results • BPR is strong medicine and will result in big gains

12. Process Flow – before and after BPR • Before BPR 1. The purchase department places an order on a vendor. A copy of the purchase order is sent to the accounts department.  2. The vendor supplies the goods directly to the purchase department enclosing a 'goods shipped' voucher and an invoice marked to the accounts department.  3. The purchase department prepares a 'Goods Received Note' and sends the material for inspection.  4. The quality department prepares an inspection note, sends a copy to the accounts department. In the meantime, the materials department takes the goods into store.  5. The accounts office compares the invoice with the purchase order and the inspection note, prepares a cheque for the delivered and accepted goods, and mails it to the vendor

13. Process Flow – before and after BPR • After BPR • Purchase orders are placed in a common database. • When a new purchase order is raised, a new record is created in the database that is accessible to the accounts department. • Once the material is received, the person receiving the material opens the purchase order in the database and checks the items received on his computer screen. With a click of a key, he can then clear it for the accounts processing. • The person in the accounts department checks whether the item supplied matches against the invoice received by him directly from the vendor (a task now done automatically by the computer). For all the items received correctly, the computer calculates and prints out a cheque for the amount due against materials received. • Inspection is to be done by vendor himself and any anomaly encountered will be adjusted for in the next consignment.

14. Process Flow – before and after BPR • Benefits of Process Engineering in Purchase • Cycle Time Cut Down • A/P Becomes Central • Increased Supplier Satisfaction • Cost cut • A/P process reengineered

15. Case Study – Hindustan Motors • Problem: The earth moving machinery division of Hindustan Motors manufactured 10 products, each with a different methodology. Management wanted a scheme to prioritize any product depending on customer needs and yet, no delivery schedule was to be upset. Additionally, the flow of materials and machinery on the shop floor had to be streamlined. • The old process: The same assembly line was used for all products. Problem was, it was designed for only one type of machinery. Adjustments of schedules were impossible since the workflow allowed no clear transit from one stage of production to another.

16. Case Study – Hindustan Motors • Solution: Three mini plants were setup - one each for dumper, loader and tract vehicles. Now separate product groups had separate processes. The plant was divided into cells, each staffed with multi-skill workers. Each cell is responsible for the entire product - so, no delays due to hand-offs. Cells are categorized as repeater cells - handling several low priority products - or runner cells - handling high priority products. • Results: Work in progress has reduced by 25 per cent.

17. BPR Vs Industrial Engineering • Industrial Engineering or Organization & Method • Functional Boundaries • Governed by concept of division of labour • Question : How to speed up Activity/function • No thought for process reorganization • BPR • No Functional Boundaries • Customer driven • Question: How to organize new process flow

18. Steps in BPR 1. Develop a vision -Process vision and process objectives 2. Define process - Defining processes to be reengineered 3. Measure process - Understanding and measuring existing processes 4. Identify IT lever -IT as enabler 5. Prototype 6. The Role of IT in BPR

19. Case Study – Bestfit Valves • Objective The CEO of the company realized that there was a high potential in the export market and decided that Fit Valve should target the export market. Thus, the CEO began with a business vision that led to a process vision: if the company had to go in for export orders, it must able to win the orders against competition. That in turn meant that the company must be able to quote against the maximum number of tenders and also be able to deliver high quality products at the shortest time. • Process to address • Quoting against tenders • Speedy delivery of quality products

20. Case Study – Bestfit Valves • Step 1 – Developing process vision CEO set a target of being able to quote within twenty-four hours of receiving an inquiry • Step 2 - Identification of the processes Responding to tenders

21. Case Study – Bestfit Valves • Step 3 - Detailed study of the process 1. Inquiry received by marketing. 2. Marketing passes drawing/sample to drawing section 3. Drawing section makes detailed drawings (2-3 weeks) 4. Production team details manufacturing process (2 weeks) and sends to costing. 5. Costing does detailed estimates for raw material and each activity and forwards quote to marketing 6. Marketing sends the quotations (1-2 weeks). Whole Process duration 6 – 8 weeks)

22. Case Study – Bestfit Valves • Process Analysis findings • Very small percentage of inquiries resulted in actual orders • Drawing section ended up spending a lot of time and effort unproductively • Few designs were finally converted to actual production orders • Engineering design was being carried out in a casual manner • Each design needed to be costed. Therefore, costing process became a very mechanized procedure often using obsolete figures.

23. Case Study – Bestfit Valves • Solutions • It was decided that drawing and engineering would not consider all the inquiries. Since most of the valves belonged to standard categories, orders differing from another only in the size (diameter, length and so on) and material could be handled by the marketing section using standard figures for a group of designs. • Marketing would assign an inquiry to a particular standard category and pass it on to costing. It referred only special cases (of which there was very little in number) to drawing and engineering • After receiving the cost figures from the costing section, marketing sent quotes to the potential customer. This reduced the cycle time to about a week

24. Case Study – Bestfit Valves • Solutions with IT leverage 1. Marketing receives inquiry 2. Marketing notes type of valve in terms of dimensions raw materials, finish and special processes. 3. Marketing keys in data into spreadsheet to make cost estimate. 4. Marketing sends quotes. (Cycle time reduced to 24 Hours)

25. Case Study – Bestfit Valves • Additional benefits of BPR exercise 1. The export turnover increased by 400 percent.  2. Given that there was no pressure any more on the drawing section to churn out drawings, most of which were actually not required at the end, the morale of the people in this section went up and the quality of drawings for confirmed orders improved sharply.  3. Costing became a more proactive function. Now, costing personnel became responsible for developing standards to be plugged into the spreadsheet. It was no longer a mechanical job. They began updating the standards constantly thus making them more realistic.  4. A very significant change was that marketing, which had hitherto acted only as a post office, became the owner of the process. The change from post man to a driving force not only boosted the morale of the marketing people, it also gave them the initiative to push towards converting most of the inquiries into firm orders by making them customer oriented

26. BPR Framework(Zachman Framework )

27. Process Step Analysis • Ultimate objective – Customer pleasure • Each process step analyzed in terms of • Real Value (RVA), • Business Value (BVA) • No Value (NVA) • Objective of reengineering is to eliminate all the NVAs', retain only those BVAs that are essential and retain and add the RVAs.

28. BPR Guidelines • Don't Automate, Obliterate • Think Process! • Tasks fall in functional boundaries • A process is across functional/departmental boundaries • Think Systems • System is a collection of men materials, ideas and their interactions organized to achieve a common purpose. • Each core process, a sub-system • provides an easy approach to analyze the existing process and design new processes

29. BPR Guidelines • Change Management • Structural • Job re-definitions • Re-deployment of workforce • Communication is the key • Prior consultation with staff/employees • Proper training

30. Role of IT in BPR • Objective of IT role • Increase their level of participation in all areas of a BPR initiative; • Provide key information regarding automated processes to business analysts; • Build a transition strategy that meets short and long-term retooling requirements; • Enforce the integrity of redesigned business processes in the target system; • Reuse business rules and related components that remain constant in a target application.

31. Role of IT in BPR • IT Role required in • Assessing Changing Business Requirements • mapping the existing information architecture to the business model to accurately depict current processes • performs multi-system integration on all relevant systems • mapping all business rules extracted from multiple standalone systems to a target design model

32. Role of IT in BPR • As catalyst • opportunities planned to take full advantage • As an enabler • utilised to support/ influence and find new ways of working • ProactiveIT • “organic”/ learning company • As a constraint • limited infrastructure = limited possibilities • As a Driver • “technology push/ effective re-design • The neutral role of IT • analysis/ understand/ enable Possible Role of IT in BPR

33. Role of IT in BPR • IT Enables New Processes Example1 : In an early Business Reengineering project the IBM credit corporation reorganized the crediting function. Just one person (a so called case manager) performs all tasks of a former whole credit department by using a new computer application system (Hammer/Champy, 1993) Example 2 WWW.Amazon.com is the Internet web page address of the currently largest virtual bookstore in the world. More than one million titles are available. None of these is on store, but can be searched for and ordered interactively by remote Internet users located as far away as Herrenberg, Germany. The Amazon company made sure though to locate near Seattle, Washington, to have easy access to the largest physical book warehouses in the U.S. Their web site even offers an alert function, which automatically sends an electronic mail (e-mail), whenever a new book has been published, whose profile (author, title, subject, etc.) the customer is interested in. This Amazon selection and ordering process would not be possible without the Internet technology.

34. Role of IT in BPR • IT Tools Help to Facilitate Project Management •  Project management tools help to analyze processes, and define new processes. They can also be used to define the introduction of process oriented application software packages • IT Lets People Work Together More Closely • Helps to Integrate Businesses • Totally integrated and help to enforce the reengineering process, by concentrating on the software implementation process

35. BPR Implementation Barriers • Hard barriers • IT problems • Resource problems • Legal obstacle • Soft Barriers • Internal individual resistance • Internal group resistance • Group resistance

36. BPR Implementation Barriers • Causes for barriers • Project related causes • People related causes • Organization related • Environment related

37. Session 12 E-Business Strategy Analysis and Objectives

38. What is E-Business Strategy? • Strategy Definition of the future direction and actions of a company defined as approaches to achieve specific objectives • Alternative definitions • “Defines how we will meet our objectives” • Sets allocation of resources to meet goals” • “Selects preferred strategic options to compete within a market” • “Provides a long-term plan for the development of the organization”

39. Why E-Business Strategy? Missed opportunities from lack of evaluation of opportunities Inappropriate direction of e-business strategy Limited integration of e-business at a technical level Resource wastage

40. What if no E-Business Strategy? Missed opportunities for additional sales on the sell-side and more efficient purchasing on the buy-side Fall-behind competitors in delivering online services – may become difficult to catch-up Poor customer experience from poorly integrated channels.

41. Strategy Models Generic Strategy Model Dynamic E-Business Model

42. Elements of Strategic Analysis

43. Techniques of Strategic Analysis • Resource Analysis • Review of the technological, financial and human resources of an organization and how they are utilized in business processes • Decision on Marketing Services • Level 0: No web site or presence on the web • Level 1: Basic web presence • Level 2: Simple static informational web site • Level 3: Simple interactive site • Level 4: Interactive site supporting transaction with users • Level 5: Fully interactive site supporting the whole buying process

44. Techniques of Strategic Analysis • Product Sourcing Development (Buy-side E-Commerce) • Level I: No use of the web • Level II: Review and selection from competing suppliers using intermediary web • Level III: Orders placed electronically through EDI • Level IV: Orders placed electronically with integration of company’s procurement system • Level V: Orders placed electronically with full integration of company’s procurement, manufacturing requirements planning and stock control system

45. Techniques of Strategic Analysis • Application Portfolio Analysis • Used to assess current information systems capability and also to inform future strategies • Organizational and IS SWOT Analysis • Help organization analyze their resources in term of strengths and weaknesses and match them against threats and opportunities

46. Techniques of Strategic Analysis • Demand Analysis • Assessment of the demand for e-commerce services amongst existing and potential customer segments • Competitive Threat Analysis • Threat of new e-commerce entrants • Threats of new digital products • Threat of new business models • Sell-side Threats • Customer power and knowledge • Use Internet to evaluat3e products and compare prices • Power of Intermediaries • Channel conflicts and result of disintermediation

47. Techniques of Strategic Analysis • Buy-side Threats • Power of Suppliers • Opportunity for buyers • Power of intermediaries • Risk include cost integration • Competitive Threats acting on E-Business

48. Strategic Objectives

49. Defining Vision and Mission • Company vision will be based on the managers’ view of the future relevance of the Internet to their industry • Can the Internet primarily complement the company other channel or whether it will replace other channel? • Customer access to Internet is high • Offer a better value proposition • Product can be delivered over the Internet • Product can be standardized

50. How can E-Business create business value • Adding value • Providing better-quality products and services • Reduce costs • Making business process more efficient • Manage risks • Create different functions and professions • Create new reality • Can be used to innovate